FiinRatings: Credit Rating Announcement on Khang Dien House Trading and Investment Joint Stock Company (BBB+ | Outlook: Stable)

04 April 2022 - 10:20 AM Alternate Text


Hanoi, 30 March 2022

FiinRatings announced that it has assigned a first-time Long-term Issuer Credit Rating 'BBB+' to Khang Dien House Trading and Investment Joint Stock Company (“KDH” or “the Company”) with the Outlook: Stable.

Beside assessing KDH’s business risk profile and financial risk profile, our rating opinion for KDH is also built on the current macroeconomic environment, the residential property outlook, and regulatory changes that could influence the sector as a whole and KDH in particular.

Vietnam residential real estate sector especially in Ho Chi Minh City area is forecasted to have a high growth in a long term despite the impact from COVID-19 over the last 2 years which caused certain interruption in implementation progress and sales activities. Specifically, the average number of apartment units sold in Ho Chi Minh City dropped to approximately 29 thousand per annum in 2020-2021 compared to the average of 68 thousand units per annum in the 5-year period 2015-2019 before the pandemic.

We have also factored in our assessment for the current industry risk factors, including (i) refinancing pressures for debts coming due in the context of credit regulation changes such as the Circular 16 by State Bank of Vietnam to restrict credits in term of corporate bonds by commercial banks; (ii) expected higher costs of capital due to the soaring interest rate environment; (iii) increasing raw material prices and outsourcing service costs driving by rising inflation; and (iv) the Government’s regulatory changes in effect or under discussion including the auction of land use rights, real estate capital gain taxes, and imposing qualification standards to real estate brokers and agents.

Read the full rating announcement HERE.

FiinRatings, a brand and part of FiinGroup, is licensed by the Ministry of Finance to operate as a Credit Rating Agency (“CRA”) for Vietnam on 20 March 2020. With continuous effort to improve expertise and credit rating methodologies, on 24 May 2021, FiinRatings received Technical Assistance from S&P Global Ratings and ADB. On March 10th, 2022, FiinGroup has been officially approved by the Climate Bonds Initiative (CBI) as the first authorized company in Vietnam to verify green bonds issued by Vietnamese businesses when participating in CBI's program.

FiinRatings maintains a strict, independent policy to meet current regulations in providing credit rating services in Vietnam as well as to comply with our conflicts-of-interest policy and to ensure the objectivity and independence in giving opinion on our credit ratings. Visit us for more information.

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